the mcgraw-hill companies, inc. 2008mcgraw-hill/irwin chapter 12 job-order, process, and hybrid cost...
TRANSCRIPT
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
CHAPTER 12
Job-Order, Process, and Hybrid Cost
Systems
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-2
Chapter Opening
Job-order cost systems capture
the unique cost of eachindividual inventory
item.
Processcost systems distributecosts evenly across the
total number of unitsproduced during
a period.
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-3
Learning Objective
LO1LO1
To distinguishbetween job-order
and processcost systems
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-4
o Accumulates costs by individual products.
o Companies use job-order cost systems when they need to know the costs of individual products or batches of products.
o Accumulates costs by individual products.
o Companies use job-order cost systems when they need to know the costs of individual products or batches of products.
Cost Systems andType of Product
Job-order cost systems may be used by:1. Walt Disney Production to determine the cost
of a particular film.2. Rust Engineering to determine the cost of an
office building constructed.3. Boeing to determine the cost of an airplane
manufactured.
Job-OrderJob-OrderCost SystemCost SystemJob-OrderJob-Order
Cost SystemCost SystemProcessProcess
Cost SystemCost SystemProcessProcess
Cost SystemCost System
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-5
Job-OrderJob-OrderCost SystemCost SystemJob-OrderJob-Order
Cost SystemCost SystemProcessProcess
Cost SystemCost SystemProcessProcess
Cost SystemCost System
o Allocates costs evenly to homogeneous products.
o Unit product cost is determined by dividing the total product cost by the number of units produced during the accounting period.
o Allocates costs evenly to homogeneous products.
o Unit product cost is determined by dividing the total product cost by the number of units produced during the accounting period.
Process cost systems may be used by:
1. Texaco in its oil refining operations.
2. Dow Chemical in the manufacture of chemicals.
3. General Mills in the manufacture of cereal.
Process cost systems may be used by:
1. Texaco in its oil refining operations.
2. Dow Chemical in the manufacture of chemicals.
3. General Mills in the manufacture of cereal.
Cost Systems andType of Product
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-6
Begin Begin productionproduction
Receive orders Receive orders from customersfrom customers
OrderOrdermaterialsmaterials
Cost Flows
ScheduleSchedulejobsjobs
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-7
Job-Order Cost FlowIncome
statementIncome
statement
Boat 101Materials
Labor & OH
Boat 101Materials
Labor & OHBoat 104Materials
Labor & OH
Boat 104Materials
Labor & OH
Boat 102Materials
Labor & OH
Boat 102Materials
Labor & OH
Cost ofgoodssold
Cost ofgoodssold
Boat 105Materials
Labor & OH
Boat 105Materials
Labor & OH
Boat 103Materials
Labor & OH
Boat 103Materials
Labor & OH
Productcosts
Productcosts
Work in process inventoryWork in process inventoryFinishedgoods
inventory
Finishedgoods
inventory
Cost ofgoods
availablefor sale
keptseparately
for allboats
Cost ofgoods
availablefor sale
keptseparately
for allboats
MaterialsLabor
Overhead
MaterialsLabor
Overhead
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-8
WIP WIPmixing packingWIP WIP
mixing packing
Process Cost Flow
Productcosts
Productcosts
MaterialsLabor
Overhead
MaterialsLabor
Overhead
IncomestatementIncome
statement
Cost ofgoodssold
Cost ofgoodssold
Finishedgoods
inventory
Finishedgoods
inventory
MaterialsLabor
Overhead
Transferred-in costs
MaterialsLabor
Overhead
MaterialsLabor
Overhead Cost ofgoods
availablefor sale
Cost ofgoods
availablefor sale
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-9
Hybrid Accounting Systems
A hybrid accounting system uses some features from both job-order and process cost systems.
Hybrid systems are commonly used in the manufacture of personal computers. Many
models are mass produced and sold as a package. Other
systems are custom built to the specifications of the customer. Custom built systems normally sell at a premium compared to
standard systems.
Hybrid systems are commonly used in the manufacture of personal computers. Many
models are mass produced and sold as a package. Other
systems are custom built to the specifications of the customer. Custom built systems normally sell at a premium compared to
standard systems.
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-10
Learning Objective
LO2LO2
To identifydocumentation
used in a job-order cost system
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-11Documentation in aJob-Order Cost System
The primary document for tracking the
costs associated with a given job
is thejob cost sheetjob cost sheet.
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-12Documentation in aJob-Order Cost System
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-13
John SmythJohn Smyth
Documentation in aJob-Order Cost System
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-14Documentation in aJob-Order Cost System
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-15
1,400 1,400 × $3.90 = $5,460× $3.90 = $5,4601,400 1,400 × $3.90 = $5,460× $3.90 = $5,460
Documentation in aJob-Order Cost System
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-16
Learning Objective
LO3LO3
To explain howevents in a
job-order costsystem affect
financial statements
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-17
Benchmore started the month of January, 2008,with the following account balances.
Debit CreditCash 73,000$ Raw Materials Inventory 7,000 Work in Process Inventory 34,000 Finished Goods Inventory 85,000 Production Supplies 300 Manufacturing Equipment 90,000 Accumulated Depreciation 32,000$ Common Stock 200,000 Retained Earnings 57,300 Total 289,300$ 289,300$
Benchmore Boat CompanyTrial Balance
As of January 1, 2008Boat 103 14,000$ Boat 104 8,000 Boat 105 12,000
34,000$
Work in Process
Boat 101 50,000$ Boat 102 35,000
85,000$
Finished Goods
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-18
Event 1Benchmore Boat Company paid $14,000
cash to purchase raw materials.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Cash +
Raw Materials Inventory
(14,000) + 14,000 = N/A + N/A N/A – N/A = N/A (14,000) OA
Assets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-19
Event 2Benchmore used $17,000 of raw materials
in the process of making boats.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Raw Materials Inventory
+
Work in Process Inventory
(17,000) + 17,000 = N/A + N/A N/A – N/A = N/A N/A
Assets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-20
Event 3Benchmore paid $1,200 cash topurchase production supplies.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Cash +
Production Supplies
(1,200) + 1,200 = N/A + N/A N/A – N/A = N/A (1,200) OA
Assets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-21
Event 4Benchmore paid $8,000 cash to production
employees who worked on Boat 103.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Cash +
Work in Process Inventory
(8,000) + 8,000 = N/A + N/A N/A – N/A = N/A (8,000) OA
Assets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-22
Event 5Benchmore applied estimated manufacturingoverhead costs of $6,240 to the Boat 103 job.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Manufacturing Overhead
+
Work in Process Inventory
(6,240) + 6,240 = N/A + N/A N/A – N/A = N/A N/A
Assets
Predeterminedoverhead rate
Total estimatedoverhead costs
Total estimateddirect labor hours
= ÷
$15,990 ÷ 4,100 = $3.90 per direct labor hour
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-23
Event 6Benchmore transferred $36,240 of product costs for completed Boat 103 from work in process inventory
to finished goods inventory.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Work in Process Inventory
+
Finished Goods Inventory
(36,240) + 36,240 = N/A + N/A N/A – N/A = N/A N/A
Assets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-24
Event 7Benchmore paid $24,500 cash for selling and
administrative expenses.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow(24,500) = N/A + (24,500) N/A – 24,500 = (24,500) (24,500) OAAssets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-25
Event 8Benchmore paid $12,000 cash to production employees for work on Boats 104 and 105.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Cash +
Work in Process Inventory
(12,000) + 12,000 = N/A + N/A N/A – N/A = N/A (12,000) OA
Assets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-26
Event 9Benchmore applied estimated manufacturing
overhead costs to boats 104 and 105.Job Rate Hours Applied
Boat 104 3.90$ × 1,000 = 3,900$ Boat 105 3.90 × 1,400 = 5,460
9,360$
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Manufacturing Overhead
+
Work in Process Inventory
(9,360) + 9,360 = N/A + N/A N/A – N/A = N/A N/A
Assets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-27
Event 10Benchmore paid $10,100 cash for utilities
and other indirect production costs.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Cash +
Manufacturing Overhead
(10,100) + 10,100 = N/A + N/A N/A – N/A = N/A (10,100) OA
Assets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-28
Event 11Benchmore recognized $4,000 of actual manufacturing equipment depreciation.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Book Value of Equipment
+
Manufacturing Overhead
(4,000) + 4,000 = N/A + N/A N/A – N/A = N/A N/A
Assets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-29
Event 12Benchmore counted the supplies on hand at year-end and recognized actual overhead cost for the
supplies used.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Supplies +
Manufacturing Overhead
(1,100) + 1,100 = N/A + N/A N/A – N/A = N/A N/A
Assets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-30
Event 13Benchmore sold Boat 101 for $91,000 cash.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow91,000 = N/A + 91,000 91,000 – N/A = 91,000 91,000 OAAssets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-31
Event 14Benchmore recognized cost of goods sold for Boat 101.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow(50,000) = N/A + (50,000) N/A – 50,000 = (50,000) N/AAssets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-32
Event 15Benchmore closed the Manufacturing Overhead account, reducing cost of goods sold by $400.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow400 = N/A + 400 N/A – (400) = 400 N/A
Assets
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-33
Debit CreditCash 94,200$ Raw Materials Inventory 4,000 Work in Process Inventory 50,360 Finished Goods Inventory 71,240 Production Supplies 400 Manufacturing Equipment 90,000 Accumulated Depreciation 36,000$ Common Stock 200,000 Retained Earnings 57,300 Revenue 91,000 Cost of Goods Sold 49,600 Selling and Administrative Expense 24,500 Total 384,300$ 384,300$
Benchmore Boat CompanyTrial Balance
As of December 31, 2008
Job-Order CostSystem Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-34
Learning Objective
LO4LO4
To explain howevents in a processcost system affect
financial statements
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-35Process Cost System Illustrated
Janis Juice Company uses three distinct processes to produce cans of apple juice. Raw materials (whole
apples) enter the Extraction Department where juice concentrate is extracted from whole fruit. The juice
extract passes to the Mixing Department where Janis adds water, sugar, food coloring, and preservatives. The juice mixture then moves to the Packaging Department
where it is canned and boxed for shipment.
Janis Juice Company uses three distinct processes to produce cans of apple juice. Raw materials (whole
apples) enter the Extraction Department where juice concentrate is extracted from whole fruit. The juice
extract passes to the Mixing Department where Janis adds water, sugar, food coloring, and preservatives. The juice mixture then moves to the Packaging Department
where it is canned and boxed for shipment.
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-36
The company’s trial balance as of January 1, 2008, is shown below:
Debit CreditCash 320,000$ Raw Materials - Fruit 7,800 Raw Materials - Additives 3,100 Raw Materials - Containers 9,500 Work in Process - Extraction 22,360 Work in Process - Mixing 7,960 Work in Process - Packaging 21,130 Finished Goods Inventory 20,700 Common Stock 180,000$ Retained Earnings 232,550 Total 412,550$ 412,550$
Janis Juice CompanyTrial Balance
As of January 1, 2008
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-37
Event 1Janis paid $84,000 cash to purchase raw materials.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Cash +
Raw Materials Inventory
(84,000) + 84,000 = N/A + N/A N/A – N/A = N/A (84,000) OA
Assets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-38
Event 2Janis processed $26,720 of whole fruit to
produce juice extract.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Raw Materials Inventory
+
WIP Extraction
(26,720) + 26,720 = N/A + N/A N/A – N/A = N/A N/A
Assets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-39
Event 3Janis paid $38,000 cash to production employees
who worked in the Extraction Department.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Cash +
WIP Extraction
(38,000) + 38,000 = N/A + N/A N/A – N/A = N/A (38,000) OA
Assets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-40
Event 4Janis applied estimated manufacturing overhead
costs to the Extraction Department work in process inventory.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Manufacturing Overhead
+
WIP Extraction
(30,400) + 30,400 = N/A + N/A N/A – N/A = N/A N/A
Assets
PredeterminedPredeterminedoverhead rateoverhead rate
Total estimatedTotal estimatedoverhead costsoverhead costs
Total estimatedTotal estimateddirect labor dollarsdirect labor dollars== ÷÷
$96,000 $96,000 ÷ $120,000 = $0.80 per direct labor dollar÷ $120,000 = $0.80 per direct labor dollar
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-41
Learning Objective
LO5LO5
To calculateequivalent units and
prepare a cost ofproduction report
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-42
Equivalent Units
Equivalent units are partially complete and are part of work in process inventory. Partially completed products are
expressed in terms of a smaller number of fully completed units.
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-43
Equivalent Units
Two half completed products are equivalent to one completed product.
Two half completed products are equivalent to one completed product.
So, 10,000 units 60% completeare equivalent to 6,000 complete units.
So, 10,000 units 60% completeare equivalent to 6,000 complete units.
+ = 1
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-44
Percent Actual Complete Equivalent
Units completed and transferred 500,000 100% 500,000 Ending inventory 85,000 40% 34,000
Total 585,000 534,000
A Janis engineer estimated the 85,000 units in ending work in process inventory were 40 percent complete. Janis computes the total equivalent units processed
in the extraction department as follows:
Equivalent Units
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-45
Event 5Janis finished processing some of the whole fruit and
transferred the related cost from the Extraction Department work in process inventory account to the
Mixing Department work in process inventory account.
Cost perequivalent unit
=Total processing cost
Number of equivalent whole units
= $0.22 per equivalent unit$117,480534,000
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-46
Event 5Janis used the cost per equivalent unit to allocate the total cost
incurred in the extraction department between the amount transferred to the mixing department and the amount in the extraction
department’s ending work in process inventory as follows:
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
WIP Extraction
+
WIP Mixing
(110,000) + 110,000 = N/A + N/A N/A – N/A = N/A N/A
Assets
Equivalent Units
Cost per Unit
Cost to be Allocated
Transferred-out costs 500,000 × 0.22$ = 110,000$ Ending inventory 34,000 × 0.22 = 7,480 Total 117,480$
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-47
The allocation of costs between unitstransferred and ending inventory can be
summarized in a cost of production report.
The allocation of costs between unitstransferred and ending inventory can be
summarized in a cost of production report.
See next slidefor Janis’ cost of
production report for theExtraction Department
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-48
Extraction Department
Cost ofProduction
Report
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-49
Event 6Janis mixed (used) $24,400 of additives with the
extract transferred from the Extraction Department.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Raw Materials Additives
+
WIP Mixing
(24,400) + 24,400 = N/A + N/A N/A – N/A = N/A N/A
Assets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-50
Event 7Janis paid $48,000 cash to production employees
who worked in the Mixing Department.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Cash +
WIP Mixing
(48,000) + 48,000 = N/A + N/A N/A – N/A = N/A (48,000) OA
Assets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-51
Event 8Janis applied estimated manufacturing overhead costs
to the Mixing Department work in process inventory.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Manufacturing Overhead
+
WIP Mixing
(38,400) + 38,400 = N/A + N/A N/A – N/A = N/A N/A
Assets
$48,000 × $0.80 = $38,400
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-52
Event 9Janis finished mixing some of the juice extract with additives and transferred the related cost from the
Mixing Department Work in Process Inventory account to the Packaging Department Work in
Process Inventory account.
Equivalent Units
Cost per Unit
Cost to be Allocated
Transferred-ou t costs 510,000 × 0.43$ = 219,300$ Ending inventory 22,000 × 0.43 = 9,460
228,760$
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
WIP Mixing
+
WIP Packaging
(219,300) + 219,300 = N/A + N/A N/A – N/A = N/A N/A
Assets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-53
Event 10Janis added containers and other packaging
materials costing $32,000 to work in process in the Packaging Department.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Raw Materials Containers
+
WIP Packaging
(32,000) + 32,000 = N/A + N/A N/A – N/A = N/A N/A
Assets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-54
Event 11Janis paid $43,000 cash to production employees
who worked in the Packaging Department.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Cash +
WIP Packaging
(43,000) + 43,000 = N/A + N/A N/A – N/A = N/A (43,000) OA
Assets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-55
Event 12Janis applied estimated manufacturing overhead
costs to the Packaging Department work in process inventory.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
WIP Packaging
+
Manufacturing Overhead
34,400 + (34,400) = N/A + N/A N/A – N/A = N/A N/A
Assets
$43,000 $43,000 × $0.80 = $34,400× $0.80 = $34,400
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-56
Event 13Janis finished packaging some of the juice and transferred the related cost from the Packaging
Department work in process inventory account to the finished goods inventory account.
Equivalent
Units Cost
per Unit Cost to be Allocated
Transferred-out costs 480,000 × 0.69$ = 331,200$ Ending inventory 27,000 × 0.69 = 18,630
349,830$
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
WIP Packaging
+
Finished Goods
(331,200) + 331,200 = N/A + N/A N/A – N/A = N/A N/A
Assets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-57
Event 14Janis paid $106,330 cash for actual overhead costs.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow
Cash +
Manufacturing Overhead
(106,330) + 106,330 = N/A + N/A N/A – N/A = N/A (106,330) OA
Assets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-58
Event 15Janis sold 490,000 cans of juice for $1 per can.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow490,000 = N/A + 490,000 490,000 – N/A = 490,000 490,000 OAAssets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-59
Event 16Janis recognized cost of goods sold for the 490,000
cans of juice sold.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow(338,100) = N/A + (338,100) N/A – 338,100 = (338,100) N/A
Assets
490,000 × $0.69 = $338,100
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-60
Event 17Janis paid $78,200 cash for selling and
administrative expenses.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow(78,200) = N/A + (78,200) N/A – 78,200 = (78,200) (78,200) OAAssets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-61
Event 18Janis closed the Manufacturing Overhead account and increased the Cost of Goods Sold account by $3,130.
= Liab. + Equity Rev. – Exp. = Net Inc. Cash Flow(3,130) = N/A + (3,130) N/A – 3,130 = (3,130) N/AAssets
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-62
The ending trial balance for JanisJuice Company is shown below:
Debit CreditCash 412,470$ Raw Materials - Fruit 6,080 Raw Materials - Additives 8,700 Raw Materials - Containers 6,500 Work in Process - Extraction 7,480 Work in Process - Mixing 9,460 Work in Process - Packaging 18,630 Finished Goods Inventory 13,800 Common Stock 180,000$ Retained Earnings 232,550 Sales Revenue 490,000 Cost of Goods Sold 341,230 Selling and Administrative Expense 78,200 Total 902,550$ 902,550$
Janis Juice CompanyTrial Balance
As of December 31, 2008
Process Cost System Illustrated
The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin
12-63
End of Chapter 12